When To Refi

4 Replies

I came across a what I think is good deal in Chicago and I have a simple question that I do not really know the answer to:

If I purchase a property cash, how soon can I do a cash out refi?

Is it as simple as ordering an appraisal with the bank and cashing out?

Wish I could give you advice on this one but I don't know. Interested to hear the responses on this one ....

It depends on the bank, and on how much $ you want to get out. Some banks will only lend a percentage of the purchase price for the first 12 mos, but after that they will lend a percentage of a new appraised value. For others the seasoning period is shorter, like six months. Maybe some of the other Chicago area folks will have some lender suggestions for you

@Al Turner - banks have a seasoning period. Typically is it 12 months or 6 months if extensive rehab work is completed. During the seasoning period you can only get a loan on what you paid for it. Typically 75% LTV for a NOO property. The lending requirements for a refi are the same as a purchase so you will still be held to the normal credit / DTI / Reserves requirements.

Fannie Mae and Freddie both allow you to refi for your cash purchase price and accusation funds before 6 months....this is no financing on the subject property.

You can do a no cash out refi (pay off existing loans) after 4 months using a new appraisal.

You can do a cash out refi after 6 months, going off the new appraisal.

Talk to local brokers who also invest and they can find lenders that will fund these loans.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here